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Stores Met Web's Holiday Challenge,
Reporting Higher December Sales

The nation's leading retailers reported solid sales for December, their most important month, capping a holiday season that many stores had feared because of the rise of online commerce.

But it appears their fears were unwarranted, with shoppers hauling home everything from jewelry and consumer electronics to outerwear and millennium merchandise. Strong promotional activity in the month, particularly at department stores, helped lure bargain-hunters.

"The department-store sector had to fight pretty hard for the gains it achieved," said Salomon Smith Barney analyst Richard Church. "It's been pretty promotional and those who tried to hold back may have hurt a little."

Federated Department Stores Inc.,
the New York chain that operates Macy's and Bloomingdale's, on Thursday reported a 6.4% rise in same-store sales, or those at stores open at least a year. Total sales for the five weeks ended Jan. 1 climbed 19.2%, to $3.42 billion from $2.87 billion a year ago.

Meanwhile,
May Department Stores Co.
said same-store sales rose 2.2% in December, with total sales advancing 4.5%, to $2.75 billion from $2.64 billion a year ago.
Dillard's Inc.
said same-store sales and total sales for the month each rose 2%.

J.C. Penney Co.
said same-store sales edged up 0.5%, while December department store sales advanced just 0.2%. Markdowns at the retailer were heavier than a year ago as the company worked to clear slow-moving inventory, according to Banc of America Securities analyst Tom Tashjian.

But though retailers were braced for new competition from e-commerce, analysts said weakness at chains like Sears and Penney was more likely the result of continued continued strength among specialty stores such as
Gap Inc.
The San Francisco clothing retailer said Thursday that same-store sales rose 5% for the five weeks ended Jan. 1. Total sales for the period surged 27%, to $2.08 billion from $1.63 billion a year ago. Analysts said the company was helped by good sales of brightly colored merchandise at its Gap stores and strong sales of cashmere at its Banana Republic locations.

Another specialty clothier,
Limited Inc.,
reported a same-store sales increase of 5%. Total sales inched to $1.85 billion, from $1.84 billion a year ago. The Columbus, Ohio, company scored big from its majority stake in
Intimate Brands Inc.,
parent company of Bath & Body Works and Victoria's Secret. Same-store sales at Intimate Brands jumped 10%, surpassing analysts' expectations for an increase of between 7% and 9%.

"Over 90% of their profits come from IBI," said Richard Baum, senior retail analyst at CS First Boston. "Limited's apparel businesses don't make very much money, and IBI makes a lot of money. They're like polar opposites at this point."

But the holidays weren't fun for
Toys 'R' Us Inc.'s
, which reported same-store sales fell 2% for the November and December holiday season. Total sales for the nine-week period ended Jan. 2 were flat at $4.4 billion.

Demand for DVD players and other electronics lifted
Circuit City Stores Inc.'s
same-store sales 6%, while total sales rose 14% to $1.78 billion. Rival
Best Buy Co.
had a sizzling December, with same-store sales up 9.8% and total sales rising 23% to $2.27 billion.

Among other retailers reporting sales figures Thursday:

Dayton Hudson Corp.
said December same-store sales rose 3.6%. Total sales rose 9.4%, to $5.74 billion. The Minneapolis company said sales at its Target discount chain met the company's expectations, while sales at its department stores and Mervyn's outlets fell below plan.

Williams-Sonoma Inc.
said same-store sales were up 4.3% for the holiday period of November and December, while total sales leapt 22.4% to $413.3 million. The upscale housewares company benefited from brisk sales of millennium items, said Goldman Sachs & Co. analyst Barbara Miller. For example, she said the company's Pottery Barn stores ran out of Decades plates, novelty dinnerware featuring cartoons representing each of the decades of the century.